China's PMI Indices suggests economy faces strong headwinds

China's PMI indices, especially the Caixin/Markit PMI, suggested that the economy, albeit still facing strong headwinds, could be moving towards stabilisation. This is likely a result of the aggressive policy from Beijing in the latest months and some support from the recovering housing market. 

"The policy stance cannot change the structural downward trend for the economy and structural reforms to promote private investment are the only long-term solution. China's two PMI indices for October suggest that the economy is stabilising although the manufacturing sector still faces strong headwinds", says Nordea Bank. 

The official PMI index, released yesterday, remained flat at 49.8, a bit lower than consensus expectation of 50.0. The Caixin/Markit PMI, released today, rose surprisingly to 48.3 from 47.2 last month, better than 47.6 expected by the market. 

No big reaction came from the equities and the spot CNY lost ground versus the USD after gaining 0.62% last Friday, the biggest gain since 2005.